Not A Good Day...

Stocks opened around the unchanged level and briefly flirted with positive territory. The market turned down south within the first hour but stayed around the unchanged level for most of the day. This all changed during the last 2 hours of the day when stocks continued to drift lower and started making a series of consecutive lower lows. We closed barely off the lows of the day.

The Dow closed the day down 171 points or - 2.01 %. The broader based S&P did better...loosing 1.83 % into the close (-17.19 points)

The market was faced with no major economic release. As such participants were left to ponder yesterday's advance in prices as well as the Treasury Auction results from today.

One can debate the meaning of yesterday's advance but there is little left to the imagination after today. Market action today was somewhat dismal and the Dow gave up almost the all of the gains from yesterday.

The broader indices performed better but clearly did not put up a great showing.

The meaning of all of this is that stock look shaky. The market sold off without a major report or news item causing it...this is never a good sign.

Some people might point to the weekly Treasury Auction result as the reason why we traded down today. I would disagree with that notion. The yield was as expected and the supply to demand ratio was well better than last week. (on average about 2.7 times more bids were received than supply was available).

As I have been saying for almost three weeks...I am neutral stocks with a short term negative bias. I still expect stocks to head lower and my best guess is that the Dow will see 8000 within the next week or so. A close above 8620 would change my outlook.

So...for those of you who are still holding onto puts...good for you and ride them a bit longer.

Until tomorrow,

Steve Benger